Listen Up! This is what my elementary school teacher used to tell me to try and get me to pay attention in class. I feel like I need to shout “Listen Up” to our credit union movement based on the recent progress report issued by the Financial Stability Board (FSB). In its report to the G20 on its progress on the Roadmap for Addressing Financial Risks from Climate Change, the FSB mentions regulatory changes that may come as a substantial surprise to many in the industry, as regulators look to embed climate-related risk into risk management and prudential regulatory frameworks.
Everything from increased reporting to enhanced data analytics, as well as enhanced scenario analyses and stress testing, and increased supervisory resources are being contemplated to address the effects of climate change on the financial services sector. The role of supervisory oversight is being developed as we speak and the management of climate-related risks will need to flow down to decision-making on frontline business functions of financial institutions. This will mean a significant change, cost, expense and regulatory burden for credit unions. The standard setting bodies are now telling us where they are headed. We all need to “listen up” and engage, so that we are not swallowed up by requirements designed for the large banks. Proportionality…
FSB Issues Progress Report on Climate Roadmap
The FSB Roadmap for Addressing Financial Risks from Climate Change: 2022 progress report notes that policy action to address such risks is more urgent than ever. The report outlines the increased frequency and intensity of extreme weather and climate-related events, and the intense debate about current and future energy policies in many jurisdictions. It also highlights that financial risks related to climate change, including transition risks, are not just a long-term issue or tail event.
continue reading »